ltcg on flat sale u/s.54

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2012 one of the requirement for claiming benefits u/s.54 is:

"assessee has purchased a new house within 1 year before or 2 years after the date of sale of house property......"

Facts:

Flat Sale date: April '12

New flat purchase date: under-construction flat registered in Jan'11 (which falls outside the limit of 1 year u/s.54) however possession of flat after Apr'12.

Query: 1. For the puspose of 1 year limit whether date of Registration (ie Jan'11) is applicable or the date of possession.
2. presuming date of possession is to be taken for this purpose, then whether all the sums paid (ie even prior to 1year) or sums paid within 1 year to be considered for exemption u/s.54.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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26 April 2012 The amount paid before 1 year from the date of transfer of the Original Asset will not qualify for deduction. generally Registration is done at the time of possession. It seems that entire money was paid in Jan 2011 itself, so in my view exemption U/s 54 will not be available.
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Querist : Anonymous

Querist : Anonymous (Querist)

27 April 2012 Not the entire money was paid in Jan'11 but yes it was significant ( around 35% of LTCG). Since generally date of possession for under construction flat( and not the date of agreement) is to be taken for Income Tax purpose ( for calculation of time limit for LTCG / STCG) then in my opinion logically speaking the same should be applicable here also since the possession is taken after sale of old flat. Hence eligible for exemption u/s.54.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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27 April 2012 I would like to draw your attention to Query 1 , where date of Registration is mentioned as Jan 11.
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Registration formalities are generally done when the full payment is being received by the vendor.
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On giving 35% or significant amount, I think, Booking of the flat was done.
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Section 54, stipulates about purchase. Even if possession is not received, exemption can be claimed.
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In this particular case, you may adopt your own stand. However, in my first reply I have tried to clarify the legal requirement.

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